A French Revolution, at last?

Despite optimistic statements in 2016 on both sides of the Atlantic (in between the European Commission’s communication on connected cars for Europe, and the Obama administration’s Detroit Auto Show announcement), it would seem that some of the hype surrounding connected and autonomous vehicles (“CAVs”) faltered. One reason may be the desensitization of the general public, as the initially promised 2020 deployment is dawning without a hint of general commercial availability in sight. On the other hand, the intricacies of the regulatory frameworks at stake also hinder the development of consumer-ready offers.

More often than not, France is perceived as an administrative maze, yet may become (unexpectedly to some) a leader in the race to regulating this incoming industry. However, far more than being limited to the automotive industry, regulating CAVs will serve as the blueprint for an artificial intelligence (“AI”) legal framework.

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The French Autorité des Marchés Financiers has recently published a synthesis of the contributions it received in response to its public consultation on Initial Coin Offerings (ICOs) to obtain stakeholder views on how these new types of blockchain offerings might be regulated.

The consultation included a presentation of ICOs, a warning on the risks they present, a legal analysis of ICOs with respect to the rules overseen by the AMF and the regulatory options proposed by the AMF. Respondents were invited to give their views on all of these points.

The English version of the synthesis can be found here, the French version here and our previous coverage of the consultation can be found here.

First published on K&L Gates Fintech Law Blog.

On 26 October 2017, France’s Financial Markets Authority, the “Autorité des Marchés Financiers” (“AMF”), published a discussion paper focusing on initial coin offerings (“ICOs”) that highlights the (many) dangers that arise from these unregulated transactions and discusses the regulation options that it currently foresees.
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Further to the adoption of Act no.2016-1691, dated 9 December 2016, on Transparency, Anti-Corruption and Modernization of Economic Life (“Sapin II” – see our compliance coverage here) and the public consultation whose results were made public on 30 August 2017 (see our coverage here), the French Ministry of Finance published a draft document aiming at adapting the French legal framework to the use of blockchain technology.

The proposed draft (which may be accessed here in French) address the possibility, for company, to register in a “shared electronic registry”:

  • Negotiable debt securities;
  • Units or shares of undertakings for collective investment;
  • Capital securities issued by corporations and debt securities other than negotiable debt securities, provided that they are not traded on a trading platform

The conditions under which such registration would possible expressly exclude any item admitted to the operations of a central depository or delivered in a system for the payment and delivery of financial instruments. In addition, the bylaws of the issuer must expressly provide for the possibility to use such shared electronic registries.

In any case, the French regulatory framework would subject to French law whenever the issuer is headquartered in France or the issuance itself is already governed by French law.

Additional technical measures will subsequently be devised by a supplementing Decree, in order to provide the required safeguards.

While assessing the relevancy of a blockchain framework for corporate titles remains difficult in the absence of such technical details, all players are welcome to provide the Ministry with observations on the proposed framework until 9 October 2017.

First published on the K&L Gates Fintech Law Blog with Emilie Oberlis.

The French Act no.2016-1691 dated 9 December 2016 on Transparency, Anti-Corruption and Modernization of Economic Life (Or “Sapin II” – see our compliance coverage here) empowered the Government to amend the regulatory framework to facilitate the transmission of certain financial securities through blockchain technology 1)Article 120 of Sapin II “The Government may by way of executive orders within the 12 months following this Act take the measures necessary to (…) … Continue reading

In order to prepare such executive order, the Ministry of Finance initiated last Spring a public consultation, whose results were made public on 30 August 2017.
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References

1 Article 120 of Sapin II “The Government may by way of executive orders within the 12 months following this Act take the measures necessary to (…) amend the regulatory framework applicable to securities in order to allow the representation and the transmission (via a shared electronic recording device) of securities that are not admitted to the operations of a central depositary or a system of payment and delivery of financial instruments.”

K&L Gates assembled a great panel on March 28 during the Global Manufacturing and Industrialisation Summit (#GMIS2017) at Paris-Sorbonne University Abu Dhabi, including David Bell, Mohammed Omar, Mark Beer OBE, Arthur Artinian, Claude-Etienne Armingaud and William Reichert, to discuss the legal and regulatory issues relating to the Internet of Things (IoT), Industrial Internet of Things (IIoT) and Connected Cars

#GMIS2017 IoT & Connected Car panel with K&L Gates

#GMIS2017 IoT & Connected Car panel with K&L Gates

The French Act No. 2016-1321 of 7 Oct. 2016 for a Digital Republic (the “Digital Republic Act”) amends the existing framework for online intermediation platform created under Article L.111-5-1 of the French Consumer code by the Act No. 2015-990 of 6 August 2015.

The Digital Republic Act creates a general, autonomous and impersonal status of online platform operator (“OPO”) and completes the existing legal framework relating to consumer protection through the consumers’ prior information.
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The advent of autonomous cars represents a unique opportunity to rethink urbanism globally. Indeed, such a technological evolution will undoubtedly foster the development of a range of new offerings, such as car sharing and value-added opportunities, while at the same time ensure added safety on the roads at a time when traffic injuries remain the primary cause of death among people aged 15 to 29.

One direction in which this new paradigm could be expressed may be the decline of exclusive car ownership and the shift toward CaaS, or “Car-as-a-Service”. Autonomous cars could be shared among a community of subscribers and used on an as-needed basis, after which they could then park themselves outside of the urban landscape for battery-reloading purposes or when not in use.
Nevertheless, such an idealistic picture can only be achieved once all regulatory barriers have been lifted.
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New China Article:

However, the convention has been signed by 75 contracting countries only, said Claude-Etienne Armingaud, Paris partner at K&L Gates. One of the most notable absentees is the United States, he added.
Read full article here.

New China Article:

However, the convention has been signed by 75 contracting countries only, said Claude-Etienne Armingaud, Paris partner at K&L Gates. One of the most notable absentees is the United States, he added.
Read full article here.

On November 10, 2016, the French Government issued a decree against the financing of terrorism which contains various measures addressing anonymous electronic money [source in French]. This new regulatory measure applies to electronic money issuers as well as their distributors, credit institutions, finance companies, consumers, and to any person who physically transfers money from a certain amount.
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